Deep dive: Carbon removal procurement & offtakes — what's working, what's not, and what's next

Carbon dioxide removal (CDR) has shifted from a fringe research concept to a commercially active market, with total advance purchase commitments exceeding $4.7 billion by the end of 2025. Yet the gap between commitments made and tonnes actually delivered remains wide: fewer than 60,000 tonnes of durable carbon removal were delivered in 2025, against forward contracts exceeding 30 million tonnes through 2035. This disconnect between procurement ambition and operational reality defines the central tension in the carbon removal market today and shapes the decisions facing every buyer, supplier, and intermediary in the ecosystem.

Why It Matters

The Intergovernmental Panel on Climate Change estimates that limiting warming to 1.5 degrees Celsius requires removing 5 to 16 gigatonnes of CO2 per year by 2050. Current global removal capacity, excluding conventional forestry, stands at roughly 0.04 megatonnes per year. Bridging this gap requires scaling removal capacity by a factor of more than 100,000 within 25 years, a challenge that depends almost entirely on whether procurement and offtake mechanisms can channel sufficient capital to suppliers at the right pace and under the right terms.

In the United States, the Inflation Reduction Act's Section 45Q tax credit now provides up to $180 per tonne for direct air capture with geological sequestration, fundamentally altering project economics. The Department of Energy's Regional Direct Air Capture Hubs program has allocated $3.5 billion across four hub projects, with Occidental Petroleum's Stratos facility in Texas representing the first industrial-scale direct air capture plant in the Western Hemisphere. Meanwhile, the Voluntary Carbon Market Integrity Initiative (VCMI) and the Integrity Council for the Voluntary Carbon Market (ICVCM) have published guidelines that increasingly distinguish between avoidance credits and removal credits, creating price premiums for verified, durable removal.

Corporate procurement has become the primary demand signal. Microsoft, Stripe, Frontier (the advance market commitment backed by Alphabet, Meta, Shopify, McKinsey, and others), and the First Movers Coalition collectively represent more than $3 billion in forward removal commitments. These buyers are effectively subsidizing the first wave of commercial-scale removal infrastructure, accepting above-market prices today to accelerate cost reductions that benefit the entire market tomorrow.

Key Concepts

Advance Market Commitments (AMCs) are legally binding purchase agreements made before a product exists at commercial scale, designed to guarantee demand and reduce investment risk for suppliers. In carbon removal, AMCs typically specify delivery windows (2027 to 2035), price ceilings ($100 to $600 per tonne depending on pathway), and quality criteria including permanence thresholds and monitoring requirements. The Frontier initiative pioneered this model for CDR, committing over $1 billion from its coalition members to purchase permanent carbon removal from qualifying suppliers.

Offtake Agreements are bilateral contracts between a removal supplier and a buyer, specifying volume, price, delivery schedule, and quality standards. These agreements serve a dual purpose: they provide revenue certainty for suppliers seeking project finance, and they allow buyers to lock in pricing before market rates increase with regulatory demand. Well-structured offtakes include milestone-based payments tied to construction progress, delivery verification protocols, and remediation provisions for underperformance.

Permanence refers to the duration for which removed carbon remains sequestered. The CDR market has converged on a rough hierarchy: geological storage (greater than 10,000 years), mineralization (greater than 1,000 years), biochar (100 to 1,000 years), enhanced weathering (greater than 10,000 years with verification challenges), and nature-based solutions such as forestry (10 to 100 years with reversal risks). Premium buyers increasingly specify minimum permanence thresholds of 1,000 years for durable removal credits.

Measurement, Reporting, and Verification (MRV) encompasses the protocols and technologies used to quantify removed carbon, track its fate, and verify claims against contractual specifications. MRV represents the trust infrastructure of the removal market. Without credible MRV, procurement commitments devolve into speculative promises. Leading MRV approaches include continuous CO2 stream monitoring at injection sites, periodic soil sampling for enhanced weathering, and remote sensing combined with geochemical modeling for ocean-based approaches.

Delivery Risk describes the probability that a contracted supplier fails to deliver promised removal volumes on schedule and at specified quality. Delivery risk is the defining challenge of early-stage procurement: as of 2025, only three direct air capture companies have demonstrated delivery at scales exceeding 1,000 tonnes per year. Buyers managing delivery risk diversify across pathways, structure contracts with milestone-based payments, and maintain portfolios large enough to absorb individual project failures.

What's Working

Frontier's Portfolio Approach

Frontier, the advance market commitment launched by Stripe in 2022 and now backed by more than 15 major corporate buyers, has emerged as the most influential procurement mechanism in the removal market. By the end of 2025, Frontier had facilitated over $230 million in offtake agreements across 30 suppliers spanning direct air capture, enhanced weathering, ocean alkalinity enhancement, and biomass carbon removal and storage. The portfolio approach works because it diversifies pathway risk: if one technology underperforms, others may compensate. Frontier's rigorous technical review process, which evaluates suppliers across 18 criteria including permanence, additionality, and MRV readiness, has become a de facto quality standard that other buyers reference.

Microsoft's Carbon Negative Program

Microsoft committed in 2020 to become carbon negative by 2030 and to remove all historical emissions by 2050. By 2025, Microsoft had contracted for over 5.8 million tonnes of carbon removal across multiple pathways, including a 315,000-tonne offtake with Heirloom Carbon Technologies for direct air capture and a large-scale agreement with Climeworks for their Mammoth facility in Iceland. Microsoft's procurement strategy distinguishes between near-term removals (biochar and enhanced weathering at $50 to $150 per tonne) and long-term durable removals (direct air capture at $300 to $600 per tonne). The company publishes detailed annual progress reports, providing market transparency that benefits the entire ecosystem.

Section 45Q and Project Finance Convergence

The enhanced 45Q tax credit has transformed project finance for US-based direct air capture. At $180 per tonne for DAC with geological storage, the credit covers 60 to 80% of current costs for first-of-a-kind facilities, making projects financeable when combined with offtake agreements at $200 to $400 per tonne. Occidental Petroleum's Stratos plant in Ector County, Texas, expected to capture up to 500,000 tonnes annually at full capacity, secured financing partly on the strength of 45Q credits stacked with voluntary market offtakes from Airbus and other buyers. This credit-plus-offtake structure has become the template for subsequent US projects.

What's Not Working

Delivery Timelines and Volume Shortfalls

The most persistent challenge in carbon removal procurement is the gap between contracted volumes and actual deliveries. CDR.fyi data shows that cumulative delivered tonnes through 2025 represent less than 0.2% of total contracted volumes. Climeworks' Orca facility in Iceland, the world's first commercial direct air capture plant, captured approximately 4,000 tonnes per year against a design capacity of 4,000 tonnes, but the follow-on Mammoth plant experienced 18 months of construction delays before beginning commissioning in late 2025. Across the market, first-of-a-kind facilities routinely take 2 to 3 years longer than projected to reach nameplate capacity.

Price Discovery and Market Fragmentation

The carbon removal market lacks centralized price discovery mechanisms. Bilateral offtake prices range from $50 per tonne for biochar to over $1,000 per tonne for direct air capture, with enormous variation even within pathways. This opacity benefits neither buyers nor suppliers: buyers cannot benchmark their contracts against market rates, and suppliers cannot signal cost reductions to attract new demand. The absence of standardized contract terms further complicates comparison. Some agreements specify delivery-on-acceptance with full payment upon verified removal; others use milestone-based structures with 30 to 50% paid during construction. Without a liquid secondary market or exchange-traded instruments, price signals remain noisy and unreliable.

MRV Gaps for Novel Pathways

While MRV for direct air capture with geological storage is relatively straightforward (measure the CO2 stream entering the injection well, monitor the reservoir), newer pathways face fundamental measurement challenges. Enhanced rock weathering, which spreads crusite or olivine on agricultural fields to accelerate mineral carbonation, requires soil sampling protocols that remain scientifically contested: how deep to sample, how to account for spatial heterogeneity, and how to distinguish weathering-driven carbonation from background carbonate cycling. Ocean alkalinity enhancement faces even greater MRV challenges, as tracking alkalinity additions across open ocean systems requires modeling frameworks that have not been validated at commercial scales. These MRV gaps directly constrain procurement: buyers who cannot verify what they purchased face reputational and regulatory risk.

What's Next

Compliance Market Integration

The single largest catalyst for carbon removal procurement will be integration into compliance carbon markets. The European Union's Carbon Removal Certification Framework (CRCF), adopted in 2024, establishes certification standards for removal activities and lays the groundwork for inclusion in the EU Emissions Trading System. In the US, California's Air Resources Board has initiated rulemaking to evaluate whether durable carbon removal credits can generate compliance offsets under the cap-and-trade program. If even 5% of global compliance carbon market demand (currently valued at approximately $950 billion annually) shifts to removal credits, it would create demand exceeding 100 million tonnes per year, dwarfing current voluntary commitments.

Insurance and Risk Transfer Products

As the market matures, insurance and risk transfer products are emerging to address delivery and permanence risks. Oka, formerly CarbonPool, launched in 2024 to provide carbon credit insurance that pays out if purchased removals are reversed or undelivered. Swiss Re has explored parametric insurance structures tied to geological storage monitoring data. These products are critical for unlocking institutional capital: pension funds and infrastructure investors will not finance removal projects without mechanisms to manage tail risks. Expect standardized insurance products covering delivery delays, underperformance, and reversal events to become available by 2027.

Aggregated Procurement and Buyer Coalitions

Beyond Frontier, new aggregation mechanisms are forming to reduce transaction costs and improve buyer leverage. NextGen, launched by South Pole and Mitsubishi Corporation, pools demand from multiple corporate buyers to negotiate bulk offtakes with removal suppliers. The First Movers Coalition, convened by the World Economic Forum, aggregates commitments from over 90 companies across sectors including aviation, shipping, steel, and cement. These coalitions reduce the minimum viable contract size (from millions to hundreds of thousands of dollars per buyer), making removal procurement accessible to mid-market companies that lack dedicated carbon procurement teams.

Technology Cost Curves

Direct air capture costs have declined from approximately $1,000 per tonne in 2020 to $400 to $600 per tonne for current generation plants, with credible projections of $150 to $250 per tonne at scale by 2030. Enhanced weathering costs range from $80 to $200 per tonne today, with potential for $30 to $80 per tonne at agricultural scale. Biochar production costs have reached $100 to $200 per tonne, with co-product revenue from soil amendment sales offsetting 20 to 40% of production costs. These cost trajectories suggest that durable carbon removal will reach price parity with high-quality avoidance credits ($50 to $100 per tonne) within the next decade, fundamentally expanding the buyer universe.

Action Checklist

• Assess your organization's residual emissions that cannot be reduced through operational changes or supply chain engagement
• Develop a removal procurement strategy that diversifies across at least three pathways to manage delivery risk
• Evaluate joining an aggregated buying coalition (Frontier, NextGen, or First Movers Coalition) to access vetted suppliers and standardized contracts
• Specify minimum permanence thresholds (1,000+ years for durable removal) and MRV requirements in all offtake agreements
• Structure contracts with milestone-based payments tied to construction progress and verified delivery, not upfront commitments
• Monitor 45Q tax credit eligibility and state-level incentives that may reduce net procurement costs for US-based removal
• Engage legal counsel experienced in carbon credit contract law to review offtake terms, including liability allocation for underdelivery
• Publish annual procurement progress reports to contribute to market transparency and build stakeholder credibility

FAQ

Q: What is the difference between carbon avoidance credits and carbon removal credits? A: Avoidance credits represent emissions that would have occurred but were prevented (for example, protecting a forest from deforestation or replacing a coal plant with solar). Removal credits represent CO2 that has been physically extracted from the atmosphere and stored durably. Removal credits command a significant price premium because they deliver net-negative emissions rather than simply reducing the rate of increase. The ICVCM's Core Carbon Principles now require clear labeling of contribution claims versus offsetting claims, and many corporate net-zero frameworks (including the Science Based Targets initiative's Net-Zero Standard) require removal credits for residual emissions that cannot be abated.

Q: How should buyers evaluate the permanence claims of different removal pathways? A: Request third-party permanence assessments based on geochemical, geological, or material science evidence rather than accepting supplier self-assessments. For geological storage, review the injection site's characterization data and long-term monitoring plan. For enhanced weathering, evaluate the peer-reviewed dissolution rate data for the specific mineral and soil type. For biochar, request pyrolysis temperature and H/C ratio data, as these determine stability. Organizations like Isometric and Puro.earth provide independent permanence verification across pathways.

Q: What is a reasonable price to pay for carbon removal today? A: Prices vary dramatically by pathway and permanence. Biochar ranges from $100 to $250 per tonne. Enhanced rock weathering costs $80 to $250 per tonne. Direct air capture with geological storage runs $400 to $700 per tonne. Buyers should benchmark against CDR.fyi's published transaction data and consider that today's above-market pricing accelerates cost curves that benefit future procurement. A blended portfolio approach targeting an average of $150 to $300 per tonne across pathways balances cost with quality and pathway diversification.

Q: What delivery guarantees should buyers require in offtake agreements? A: At minimum, require: verified delivery within specified windows (typically 1 to 3 year ranges to accommodate construction delays), independent third-party MRV by an accredited verifier, defined remediation mechanisms for partial delivery (pro-rata price adjustments or replacement credits from equivalent pathways), and termination rights if delivery falls below 50% of contracted volumes within any rolling 24-month period. Performance bonds or letters of credit covering 10 to 20% of contract value provide additional protection.

Q: How do Section 45Q tax credits affect procurement pricing? A: The 45Q credit provides $180 per tonne for direct air capture with geological storage and $130 per tonne for DAC with utilization, directly reducing the net cost to suppliers. Well-structured offtakes allow buyers to benefit from this cost reduction: a DAC facility with production costs of $400 per tonne can offer offtake pricing of $250 to $350 per tonne after applying 45Q credits. Buyers should verify that suppliers have secured 45Q eligibility and understand that credit transferability provisions in the Inflation Reduction Act allow suppliers to monetize credits even without sufficient tax liability.

Sources

• CDR.fyi. (2025). Carbon Dioxide Removal Purchases Tracker: Annual Summary 2025. Available at: https://www.cdr.fyi
• Frontier. (2025). Frontier Climate Advance Market Commitment: 2025 Progress Report. San Francisco, CA: Stripe Climate.
• Microsoft. (2025). 2025 Environmental Sustainability Report: Carbon Removal Progress. Redmond, WA: Microsoft Corporation.
• Intergovernmental Panel on Climate Change. (2022). Climate Change 2022: Mitigation of Climate Change, Working Group III Contribution to AR6. Cambridge, UK: Cambridge University Press.
• US Department of Energy. (2025). Regional Direct Air Capture Hubs: Program Status and Milestones. Washington, DC: DOE Office of Clean Energy Demonstrations.
• Integrity Council for the Voluntary Carbon Market. (2024). Core Carbon Principles and Assessment Framework. London: ICVCM Secretariat.
• National Academies of Sciences, Engineering, and Medicine. (2019). Negative Emissions Technologies and Reliable Sequestration: A Research Agenda. Washington, DC: The National Academies Press.